Prague - Seeking to end years of rancor, President Barack Obama and Russian President Dmitry Medvedev on Thursday signed the biggest nuclear arms pact in a generation and envisioned a day when they can compromise on the divisive issue of missile defense.

The new treaty, the first of its kind in two decades and nearly a year in the making, signaled a bold new opening in relations between the former Cold War foes. Both leaders hoped for more progress on economic matters and potentially even deeper cuts in their robust nuclear arsenals, while the Russian president still warned of potential pitfalls ahead.

The pact will shrink the limit of nuclear warheads to 1,550 per country over seven years. That still allows for mutual destruction several times over. But it is intended to send a strong signal that Russia and the U.S. — which between them own more than 90 percent of the world's nuclear weapons — are serious about disarmament.

Obama and Medvedev reaffirmed their commitment to considering new sanctions against Iran if the Islamic republic continues to refuse to suspend uranium enrichment and start talks on its nuclear program.

Medvedev said it's regrettable that Iran has not responded to many constructive proposals the international community has offered, and it's possible the United Nations Security Council will have to take up the issue. And Obama said the U.S. will not tolerate any actions by Iran that risk an arms race in the Middle East or threaten the credibility of the international community.

They spoke after sitting side-by-side in an elegant hall in the Czech Republic capital city, signing the nuclear arms deal that awaits ratification by the Russian legislature and the U.S. Senate. The White House lobbying effort on ratification is under way.

The upbeat U.S. president said he was confident that Democrats and Republicans would ratify the treaty in the Senate, where 67 votes will be required.

"Today is an important milestone for nuclear security and nonproliferation, and for U.S.-Russia relations," Obama said. Medvedev hailed the signing as a historic event that would launch a new chapter of cooperation between the countries.

Inside the hall, the anticipated moment came as the two presidents picked up their pens, glanced at each other and grinned as they signed several documents, with aides transferring the papers back and forth so all would have both signatures. When it was done, the leaders seemed momentarily at a loss, with Medvedev flashing a smile and a shrug before they stood to shake hands.

Obama said the treaty sets a foundation for further cuts in nuclear arms.

And he pledged more conversation with Medvedev about missile defense, which remains a sticky issue between the countries as the U.S. moves ahead with plans it calls no threat to Russia. Obama said the missile defense system envisioned is not aimed at changing the "strategic balance" with Russia but rather as a way to counter launches from other countries.

Medvedev said he was optimistic about reaching a compromise on the matter.

As for talks about even deeper cuts in nuclear weaponry, the aim would be to discuss, for the first time, cuts in short-range U.S. and Russian nuclear weapons as well as weapons held in reserve and in storage.

Beyond slashing nuclear arsenals, the U.S. sees "New START" as a key part of efforts to "reset" ties with Russia, badly strained under the Bush administration, and engage Moscow more in dealing with global challenges, including the nuclear arsenal of North Korea and nuclear ambitions of Iran.

The new pact is only part of the Obama administration's new nuclear strategy. It was signed only days after the White House announced a fundamental shift in its policy on the use of nuclear weapons, calling the acquisition of atomic arms by terrorists or rogue states a worse menace than the Cold War threat of mutual annihilation.

Other U.S. nuclear initiatives will follow the Prague signing. Leaders from more than 40 countries will gather in Washington next week to discuss improvements in securing nuclear arsenals.

The White House plans to lead calls for disarmament in May at the United Nations during an international conference on strengthening the Nuclear Non-Proliferation Treaty.

The treaty signed Thursday is the most significant nuclear disarmament pact in a generation, and Medvedev has lauded it as "an important step" in disarmament and arms control efforts.

Russian analysts say Russia needs the deal to ease the burden of replacing a large number of aging Soviet-built missiles. "This treaty is in Russia's best interests," said Sergei Rogov, the head of the USA and Canada Institute, an influential think tank.

Russia has warned that it reserves the right to withdraw if the planned U.S. missile defense system grows into a threat. But Moscow had warned that it could pull out of the historic 1991 START treaty, and never did.

Russia has welcomed Obama's decision to scrap Bush administration plans to build a missile defense system in Poland and the Czech Republic. But the Kremlin is still concerned about a revamped U.S. missile interceptor project, including a facility in Romania.

Brian McKeon, a senior adviser to Vice President Joe Biden, said the U.S. missile defense system does not affect strategic stability. "The President has made clear that he is committed to continuing to develop and deploy that system," said McKeon, writing in the White House blog.

While the Russian parliament is likely to follow the Kremlin's lead, the ratification process in the U.S. Senate could be troublesome. Fearing potential trouble, Moscow has said that Russian lawmakers will synchronize their moves to ratify the deal with the U.S. legislators.